DIAL and a “probity audit”

The levying of ADF and UDF are other controversial measures involving private developers. Photo: Hindustan Times

Finally the Union civil aviation ministry has ordered a “probity audit” on the functioning of 11 joint venture (JV) companies formed by the Delhi International Airport Ltd (DIAL).

As reported by Mint on Wednesday, in the process of Delhi airport’s modernization, DIAL formed these JV’s to manage its non-aeronautical “revenue streams”. Basically, these companies were involved in hospitality services, food, advertising and parking among other areas. An analysis of revenue sharing between DIAL and the Airports Authority of India (AAI) by the aviation regulator, the Airports Economic Regulatory Authority of India (AERA) has pointed out that this arrangement reduces the government’s share of revenue.

AERA had objected to these JVs as did the Comptroller and Auditor General (CAG) and other agencies as well. In fact, the functioning of these companies is rather opaque. AAI, as the Mint story points out, does not have representatives on the boards of these 11 companies but only on the board of DIAL.

This is not the first time that functioning of the refurbished Delhi airport (and others as well) has been in controversy. The privatization and modernization process of these airports was not planned properly. The levying of Airport Development Fee (ADF)—meant to plug the gap in development costs-- and User Development Fee (UDF) are other controversial measures involving private developers. ADF will not be levied from early next year. Seen from the vantage of the present day, these measures appear arbitrary even if private operators have a good justification for them.

If only to clean the Augean stables of airport privatization, three things need to be done. First, the report of the “probity audit”, whenever it is issued, needs to be acted upon and not merely consigned to some government cupboard. Two, the airports regulator needs to be empowered and roadblocks on its path—and there have been many—need to be removed. There is no reason, why like other regulators, it should not have the last word on the functioning of these airports. Finally, when the Parliamentary Accounts Committee issues a report on the findings of the CAG report, it should be debated threadbare.

The issue here is not to end the privatization and modernization of Indian airports—for AAI is hardly upto that job—but to ensure probity and fairness in the process.